Human Resource Planning

Human Resource Planning - Definition

Human Resource Planning is the process of determining the human
resource needs of an organization and ensuring that the organization
has the right number of qualified people in the right jobs at the right
time.

• HRP is needed to meet business objectives and gain an advantage

over competitors.
The Process of HRP
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Forecasting:
The attempts to determine the supply of and demand for various types of human
resources to predict areas within the organization where there will be labour
shortages or surpluses.

Forecasting the Demand for Labour:

• An organization forecasts demand for specific job categories or skill areas.

• After identifying relevant job categories or skills, the planner investigates the
likely demand for each.
• The planner must forecast whether the need for people with the necessary skills
and experience will increase or decrease.
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• Methods for forecasting Human Resources needs:
Two major Techniques:
 Judgemental (managerial estimates, the Delphi technique, and scenario analysis)
Mathematical: various statistical modelling methods such as time series analysis,
personnel ratios, productivity ratios, etc.

1. Managerial Estimates:
- Managers estimate future human resources need based on their past experience.
- This can be done by top-level managers and passed down, by lower-level manager
and passed up, or combination of both.
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2. Delphi Technique:
- Each member of a panel of experts independently estimates future
demand, specifying their underlying assumptions.
- An intermediary then presents each expert’s forecast and
assumptions to the others and allows the experts to revise their
position.
- The process continues until some consensus emerges.
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3. Scenario Analysis:
- involves using workforce environmental scanning data to develop
alternative workforce scenarios.
- These scenarios are developed in brainstorming sessions with the line
managers and human resource manager.
- They forecast what they think their workforce will look like five or
more years in the future.
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 Mathematically based methods:
1. Trend Analysis: Constructing and applying statistical models that
predict labour demand for the next year.
They might include measures of the economy (such as sales and
inventory levels), actions of competitors, changes in technology.

2. Productivity ratios
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Determining Labour Supply:

- Once a manager has determined the types and numbers of

employees required, it is necessary to understand labour supply
situation.
- This involves a thorough analysis of presently employed personnel
and a forecast of expected changes.
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• Techniques of determining labour supply:
1. Skills Inventory:
A skills inventory consolidates information about the organization’s human resources. It
contains information about –
a) Personal data: age, sex, marital status
b) Skills : job experience, training
c) Special qualifications: membership in professional groups, special achievements
d) Salary and job history: present and past salary, various jobs held
e) Company data: benefit plan data, retirement information, seniority
f) Capacity of individual: test scores on psychological and other tests, health information
g) Special preferences of the individual: geographic location, type of job
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2. Management Inventory:
- Some organizations maintain a separate management inventory.
- It contains biographical data.
- In addition, it contains brief assessment of the managers past
performance, strengths, weaknesses, and potential for advancement.
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3. Transition Matrix:
A chart that lists job categories held in one period and shows
proportion of employees in each of these job categories in a future
period.
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Developing Action Plans:
Once the net human resource requirements have been determined,
managers must develop action plans for achieving the desired results.
Some of the actions are:
1. Adding Human Resources – permanent, temporary, or to outsource.
2. Downsizing – reducing the number of workers through (a) layoffs (b)
terminations © early retirement (d) voluntary resignation
Tools and Techniques of HRP
1. Succession Planning:
A technique that identifies specific people to fill future openings in key
positions throughout the organizations.

2. Organizational Replacement Chart: